Correlation Between Solutions and Coheris SA

Can any of the company-specific risk be diversified away by investing in both Solutions and Coheris SA at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Solutions and Coheris SA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Solutions 30 SE and Coheris SA, you can compare the effects of market volatilities on Solutions and Coheris SA and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Solutions with a short position of Coheris SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solutions and Coheris SA.

Diversification Opportunities for Solutions and Coheris SA

-0.83

Correlation Coefficient

Solutions  Coheris SA

Pay attention - limited upside

The 3 months correlation between Solutions and Coheris is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Solutions 30 SE and Coheris SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coheris SA and Solutions is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Solutions 30 SE are associated (or correlated) with Coheris SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coheris SA has no effect on the direction of Solutions i.e., Solutions and Coheris SA go up and down completely randomly.

Pair Corralation between Solutions and Coheris SA

Assuming the 90 days trading horizon Solutions 30 SE is expected to under-perform the Coheris SA. In addition to that, Solutions is 1.19 times more volatile than Coheris SA. It trades about -0.26 of its total potential returns per unit of risk. Coheris SA is currently generating about 0.14 per unit of volatility. If you would invest  658.00  in Coheris SA on September 13, 2024 and sell it today you would earn a total of  164.00  from holding Coheris SA or generate 24.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Solutions 30 SE  vs.  Coheris SA

Solutions 30 SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Solutions 30 SE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Coheris SA

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Coheris SA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical indicators, Coheris SA sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Solutions and Coheris SA

The main advantage of trading using opposite Solutions and Coheris SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solutions position performs unexpectedly, Coheris SA can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Coheris SA will offset losses from the drop in Coheris SA's long position.

The idea behind Solutions 30 SE and Coheris SA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.